Cabinet of Ministers proposes 9-14% export duties for cereals

The Cabinet of Ministers proposed a draft law to parliament that would introduce export duties for cereals, according to the draft published yesterday: a maximum of 9% of the value or EUR 17 per mt for wheat, a maximum of 14% or EUR 23 per mt for barley and a maximum of either 12% or EUR 20 per mt for corn. Yegor Samusenko: Should the duties be introduced, we see domestic prices lowering by a corresponding amount with grain traders, which act as price setters in the local market, passing most of the duties on to crop producers. Though the draft law envisages a minimum fixed amount for duties in Euro terms, we note the fixed amounts are close to current-price-based duties calculated on percentage levels. Thus should global prices for commodities increase, the percentage will act as a base for calculating duties, otherwise fixed Euro amounts will be used. In either case, we see the suggested duties as negative for crop producers, with highest impact being visible at: (1) less efficient companies; and (2) companies focusing on rapid land bank growth financed through operating cash flow.